Investors into shares which are within the enterprise investment scheme (EIS) obtain a reduction in income tax equal 30% of their investment (subject to the maximum state above.) The tax relief cannot exceed the investor's tax liability. The minimum investment is £500.

EIS relief is available where an individual subscribes wholly in cash for new, fully paid up ordinary shares in a qualifying company. Broadly a qualifying company is an unquoted trading company, with assets less than £15 million before the share issue an less than £16 after the share issue.

For the purpose of obtain EIS relief, the activity of certain trades are not considered to be trading, such as: property development, financial activities, share or property dealing, investment, hotel management, farming, legal and accountancy services.

A qualifying investor cannot:

Be an employee or partner.

Be a director, unless receiving only a reasonable remuneration

A person who with associates hold more than 30% of the ordinary shares. An associate has the meaning of spouse, lineal descendant or ancestor. For instance, if the company is majority owned by one person, then this person's grandparent would not qualify but a sibling would be a qualifying investor.

EIS relief will be withdrawn if the investor sells his shares within 3 years following the date of their issue.

Other than the differences summarised in the comparison table above, the SEED scheme is a form of EIS schemes. The qualifying company cannot raise more than £150,000 from SEED and must have assets of less than £200,000.

An individual who subscribes for new, eligible shares in a Venture Capital Trust (VCT) is entitled to claim a tax reduction which is the lower of 30% of the amount subscribed for eligible shares in VCTs in the year (up to the yearly maximum state above), and the individual's tax liability for the year.

Dividends are tax exempt on the first £200,000 invested in VCT each year.

If the VCT shares are disposed of within five years of their issue, relief is withdrawn.

The VCT must be a listed fund which distributes at least 85% of its income. At least 70% of its investments must be in qualifying companies. Broadly, qualifying companies are unquoted, UK trading companies with assets of less than £7million.

The tax reducers for subscriptions into EIS shares and VCTs can reduce a tax liability to nil, but they cannot create a repayment.